If an unreformed Medicare program is to be able to pay the hospital bills of today's workers when they reach retirement, industry and government will have to pass on additional yearly costs of at least $7.4 billion to investors and consumers. In addition, workers will face additional annual costs of at least $115.7 billion in direct taxes and reduced wages. These costs will be the result of the additional payroll taxes, on top of current payroll taxes, needed to assure long-term fiscal sol- vency of the cash-strapped Medicare hospitalization trust fund if no reforms are enacted. The reason the burden is so heavy on employees is that an increase in payroll taxes technically is shared by both the employer and the employee. Experience indicates that about 88 percent of the cost of addi- tional employer taxes is passed on to workers in the form of reduced wages and compensation. I Moreover, the cost of stabilizing the hospital trust fund is only part of the necessary burden if re- forms are not implemented. To cover the rising costs of Part B, which covers physicians' costs, Congress would have to raise taxes even further. The current financial status of Medicare is precarious. Without significant structural reform of the system or increases in the current payroll tax to maintain the level of benefits and spending, Medi- care will go bankrupt. For Medicare to remain financially solvent and legally able to pay for hospi- tal care for today's "baby boomers" when they retire, Congress needs either to find additional money for the hospital trust fund or to slow down its rate of spending.